Paytm’s 27% crash on debut worst among IPOs overRs 1k crore

MUMBAI: The much-anticipated listing of Paytm, which had raised Rs 18,300 crore in India’s biggest IPO, ended on a bitter note with the stock crashing 27% from its issue price of Rs 2,150, closing at Rs 1,564. At the debut-day close, the plunge in Paytm stock was the worst for any newly listed company that had an IPO of over Rs 1,000 crore. The sharply lower closing also eroded about Rs 38,000 crore worth of investors’ wealth. From a market capitalisation of Rs 1.39 lakh crore (about $20 billion) at the IPO price, the company, a pioneer in techenabled payment solutions, is now valued at Rs 1.01 lakh crore (about $13.6 billion) that makes it the 52nd most valued company in India. The listing was for One 97 Communications that operates Paytm. The closing price was 20% below the price discovered during the hour-long prelisting session. Technically, the stock closed at the lower circuit, which is also leading to fears among marketmen that it may fall further on Monday when trading begins after the extended weekend. What has added to those fears is a report by Australian financial services major Macquarie that put a price target of Rs 1,200 for the stock. Despite the sharp value erosion on its debut session on Dalal Street, Paytm still has a market capitalisation that is more than companies like Hindalco, Coal India and BPCL. At Thursday’s close, Paytm is valued about Rs 6,000 crore more than Coal India, the largest coal producer in the world that so far had India’s biggest IPO when in October 2010 it raised about Rs 15,200 crore. However, in contrast to Paytm’s sliding stock price on listing, on its market debut in early November 2010, Coal India had rallied nearly 40%. Currently, Paytm is worth below the $16 billion valuation that the company had got in 2019, when it raised $1 billion from Softbank, ANT and other investors. When the bidding for Paytm IPO closed on November 10, the offer was oversubscribed 1.9 times, mainly on the back of institutional and retail investors. After setting a listing price of Rs1,955 during the pre-open session, the stock lost ground through the session and closed at the day’s low. The Macquarie report, titled ‘Too many fingers in too many pies’, noted the company had a “complicated organisation structure, related-party transactions, churn in top management and a thinly staffed board with 75% of members being based out of India”. Analysts at Macquarie believe that for Paytm, obtaining a small finance bank licence could be difficult. The Paytm management said that the analysts had never approached the company to understand its business model.

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